How many more times will we be conned by crypto?

Why haven't cryptocurrencies with floating rates become as obsolete as the Beta recorders? Their flaws have been revealed over the past 15 years, lacking inherent value and transparency. Their issuers can be anyone, and their creators are oftentimes unknown. Typically, their prices are driven by social media gossip. When confidence dips, without government monitoring, the only recourse is to sell before total loss of value. Unlike physical assets, when crypto crashes, there's nothing tangible to salvage. It was not unexpected when the price of Bitcoin declined in 2021. This dip mirrored the stock market crash during the Great Depression. Billions of dollars were lost in subsequent bankruptcies. Despite all evidence, cryptocurrencies continue to exist as avid crypto supporters ardently defend it.

Investment professionals find justification in cryptocurrencies due to the decentralized transparency it provides, viewing it as the prospective face of finance. They challenge the basic principles of what makes complex financial systems function. The explosive growth of cryptocurrency from 2009 has been as exceptional as its power to evade regulation, bearing stark resemblance to scams. Bitcoin’s dramatic surge from $27,000 to $45,000 since October infuses the beleaguered industry with hope. This increase appears to be fueled by anticipation of SEC approval that would ensheath the business in government and institutional investor endorsement, this would uplift its image.

Historically, we have seen these oscillations which are bound to persist while cryptocurrencies continue to counter economic principles. If the EFT boundary is crossed, this could spell disaster for financial stability. Cryptocurrencies have progressed remarkably without notable government oversight for two reasons. Firstly, new technology brings about uncertainty which tends to at first numb governments and users to possible risks. Secondly, the cryptocurrency industry has a powerful lobby behind it. This lobby consists of counter cultural enthusiasts, dubbed cryptonites, and the cryptopreneurs which includes early adopters of cryptocurrencies and investment firms racing to turn cryptocurrency into a new source of revenue.

In 2022, a reported staggering amount was contributed to political campaigns by FTX and its executives to keep the momentum going. This coupled with hasty due diligence procedures being adopted with regards to cryptocurrency companies opens the field to cryptocreeps, cyber criminals who are exploiting cryptocurrency’s ease of use for illicit activities.

How many warnings need to be flagged before Congress understands that a computer code that can be developed by digital con artists and that is favored by cyber criminals, can never be a stable or reliable financial tool, especially in its existing form? Current regulations need to establish a modern system of oversight where the authority of regulators is clear cut and is tasked with shielding consumers and financial systems. Cryptocurrency companies should be made to adhere to rigorous regulations like those of the banking and securities sectors, concerning their capital, liquidity, security, governance, and stability standards. Furthermore, it should be mandatory for these companies to maintain high standards for the integrity, competence and experience of issuers, executives and owners. This change is imperative, and 2024 is the targeted year for its enforcement, but can this be achieved amidst all the political lobbying and tech buzz?